In Spain, building a business requires much more than just investment and hard work: it means creating jobs, preserving a legacy, and sustaining a life’s work. When that business becomes over-indebted, it should not always be assumed that liquidation is the only option. The insolvency reform introduced by Law 16/2022 strengthened mechanisms such as the Second Chance Law and created a specific framework for microenterprises through the Special Procedure for Microenterprises, precisely to provide a path to continuity, reorganization, and, in certain cases, debt relief.
At Cap Capital, we believe that a solid business deserves a chance to move forward even if it is facing financial difficulties. We invest in industrial companies with a proven track record, dedicated teams, and long-term potential. This article explains the legislation in effect in 2026 and how it can serve as a fresh start for family-owned businesses.
What is the Second Chance Act?
"Second Chance" is a simplified bankruptcy procedure that allows an individual (individual or self-employed person) to discharge or restructure their debts when they can no longer pay them. The 2026 practical guide establishes five legal criteria for qualifying under the law: (1) being an individual or self-employed person; being currently or imminently insolvent; having at least two creditors; and act in good faith; and not having been convicted of serious economic crimes. In addition, total liabilities may not exceed 5 million euros , and since the 2022 reform, it is no longer mandatory to negotiate an out-of-court settlement.
One of the main questions debtors have is whether they can have their debts to the Internal Revenue Service or Social Security discharged. Following Supreme Court rulings 260/2026 and 254/2026, the criteria are clear: the discharge applies individually to each public creditor, forgiving the first €5,000 in full and 50% of the remainder up to a maximum of €10,000. Furthermore, the Court has clarified that subordinated public claims may be fully exempted. This doctrine provides legal certainty to self-employed individuals and administrators who were uncertain about its scope.
How long does the process take?
Time is more important than money when you're in debt. According to legal experts, the entire process—from filing the petition to the ruling that discharges the debt— takes between 6 and 18 months depending on whether there are assets to liquidate. The fastest route (insolvency without an estate) is usually resolved in 6–9 months, while cases involving assets take 12 to 18 months. The key is to submit a well-documented case file and act with transparency, as the judge will require the debtor to provide all information regarding their assets, liabilities, and the source of the debts.
Another notable change is that public debt is treated uniformly: a transfer of liability is no longer required to block the discharge. The Supreme Court has ruled that the transfer is not punitive in nature and that the debtor is only excluded when very serious fraudulent conduct is proven. In practice, this makes it easier for company directors and self-employed individuals to start over after meeting the requirements of good faith.
What if my business is a microenterprise?
Most of the businesses in our industrial sector are micro-enterprises. The Tax Agency defines a microenterprise as any individual or legal entity that, during the previous year, employed fewer than ten workers and had a turnover of less than €700,000 or liabilities of less than €350,000. For these businesses, the 2022 insolvency reform established the Special Procedure for Microenterprises, a mandatory and exclusively online process designed to reduce costs and time.
This procedure has two paths: continued or liquidation[10]. If the company is viable, it may file a going concern plan to restructure its debt and continue operating. A specialized law firm explains that this plan must identify the affected claims and may propose debt forgiveness, payment deferrals, or even the conversion of claims into equity loans, combining them with a payment plan and reorganization measures. The process is carried out using standardized forms, and approval is decided by a majority of creditors.
A key aspect of ensuring continuity is the suspension of judicial or extrajudicial enforcement proceedings on assets essential to the business. The Illeslex guide notes that, simply by filing a petition to initiate the special proceeding, the debtor may ask the judge to suspend attachments on its assets and rights necessary for the business. This measure provides immediate relief and allows for negotiations with creditors without the pressure of losing assets.
If the plan is not approved, or if the company is not viable, the process of liquidation. In that case, the assets are sold to pay creditors, and once the liquidation is complete, the debtor may request discharge of outstanding debts. As with the Second Chance program for individuals, subordinated public debts may be discharged, and the limits of €5,000 and 50% up to €10,000 per creditor apply.
More Than Just Numbers: Protecting the Business Legacy
Bankruptcy law deals with assets, liabilities, and deadlines, but behind every case there are people and dreams. Liquidating a company that still generates value drives away its customers, destroys jobs, and wipes out the intangible capital built up over years in the blink of an eye. That is why the going-concern plan is not just a table of figures; it is a strategy to save jobs, maintain the trust of suppliers and customers, and preserve the emotional legacy of business families.
When a business undergoes a generational transition without proper planning, the Second Chance program can serve as a bridge between one generation and the next. Preparing for the transition with sound insolvency advice ensures that the new generation inherits a healthy business rather than a burden. In turn, creditors recover a portion of their claims, and an economic activity that breathes life into the community is kept alive.
How Cap Capital Can Help You
At Cap Capital, we believe that liquidity strains do not have to spell the end when there is a solid business foundation. Our approach focuses on investing in established industrial companies with proven capabilities, even if they are currently undergoing bankruptcy proceedings or a Second Chance procedure. We provide financial stability, support the management team, and prioritize continuity over liquidation. We believe that trust is built on action: we retain the teams, respect the company culture, and work toward long-term goals so that the second chance becomes a lasting reality.
If your business or your family’s business is at a crossroads, don’t wait for foreclosures and interest to eat away at its potential. The law in effect in 2026 offers clear tools and a stable legal framework. A good strategy can turn a crisis into a fresh start. Let’s talk and let’s plan the next step together.
